Advertise on NYTimes.com China’s Industrial Ambition Soars to High-Tech

New York Times: Advertise on NYTimes.com China’s Industrial Ambition Soars to High-Tech

SHENZHEN, China — Few people have heard of the BYD Corporation — BYD for Build Your Dream — but this little-known company has grown into the world’s second-largest battery producer in less than a decade of existence. Now it plans to make a great leap forward: “We’d like to make a green energy car, a plug-in,” said Paul Lin, a BYD marketing executive. “We think we can do that.”
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Even in go-go China, such lofty aspirations may sound far-fetched. But BYD has built a 1.6-million-square-foot auto assembly plant here and hired a team of Italian-trained car designers; it plans to build a green hybrid by the end of the year.

No longer content to be the home of low-skilled, low-cost, low-margin manufacturing for toys, pens, clothes and other goods, Chinese companies are trying to move up the value chain, hoping eventually to challenge the world’s biggest corporations for business, customers, power and recognition.

The government is backing the drive with a two-pronged approach: using incentives to encourage companies to innovate, but also moving to discourage low-end manufacturers from operating in southern China. That step would reverse one of the crucial engines of this country’s spectacular economic rise.

But by introducing tougher labor and environmental standards and ending tax breaks for thousands of factories here, the government has sent a powerful signal about its global ambitions, and helped encourage an exodus of factories from an area long considered the world’s shop floor. ...

...World-class brands that have grown dependent on outsourcing labor-intensive production to China are now searching for alternatives. Even the retail behemoth Wal-Mart, which moved its global procurement center here to Shenzhen in 2002, is going to be forced to find new sourcing channels to fill its 5,000 stores worldwide.

For millions of consumers around the world, experts say the policy shift could also mean higher prices for a broad array of goods, from pens and hammers to Barbie dolls and running shoes. ...